Ballantyne Strong, Inc., a leading cinema equipment vendor and service provider, has been keeping their public relations staff busy this week with two important announcements.

On Thursday the Omaha, Nebraska based company released their record breaking earnings for the third quarter of 2010. If you were looking for a sign that the digital cinema rollout was truly underway, then Strong’s financial statement could serve as exhibit A.

The company’s net revenue for the quarter ending September 30th of this year was USD $32.9 million, a 99 percent increase in sales over the same quarter in 2009. Strong’s net earnings jumped from USD $500,000 (USD $0.04 per share) a year ago to USD $2.3 million (USD $0.16), making it the second consecutive record quarter for the vendor.

One of the biggest contributors to Strong’s increased earnings was the sale of digital cinema equipment, which leapt 291 percent to USD $20.2 million. Meanwhile, exhibitors scooped up USD $5 million worth of cinema screens, improving sales by 77 percent. Silver screens needed for certain 3D systems were the biggest sellers. And, with all that d-cinema equipment rolling out the door, someone had to actually install it in theatres. Strong made USD $2.2 million providing cinema services, an increase of 148 percent.

After all the bills were paid Strong’s profits for the quarter were USD $6.5 million, which tops last year’s third quarter take of USD $3.6 million. What’s interesting however is that the company’s profit margin actually declined from 21.5 percent of revenue to 19.6 percent. This means the retail cost of digital cinema equipment is declining, slowly eating away at Strong’s markup as it inches closer to wholesale prices.

Evidence of this can also be seen in Strong’s net revenue for the first three quarters of 2010. Sales grew more than 70 percent to USD $91 million and so far this year the company has walked off with gross profits of USD $16.7 million. However, that’s an 18.4 percent margin, whereas during the first three quarters of 2009 Strong’s gross profit was USD $11.2 million with a 21 percent margin. The company may be selling a lot more digital cinema equipment this year, but is doing so at a slightly lower price.

Even so, in these economically challenged times, which chief executive officer wouldn’t want to jump on an earnings call to brag about increased revenue and profits. That might be why Gary L. Cavey signed on to Ballentyne Strong as their new CEO and president, an announcement made earlier this week.

After a search that lasted more than a year, Cavey was the candidate chosen to take over for John Wilmers, who retired as Strong’s President and CEO this past September. Wilmers will continue to work with Strong until the end of 2011 in an effort to transition Cavey into the job.

Cavey comes to Ballantyne Strong from Midland Radio Corporation, a wireless communications manufacturer where he was chief operating officer. In the press release announcing Strong’s third quarter earnings he stated:

“This is a very exciting time to join Ballantyne… The digital trend is enabling strong growth in digital projector systems, cinema screens and digital cinema services. Through the first nine months of this year, Ballantyne sold 931 digital projection systems, generated $13.0 million from cinema screen sales and installed approximately 1,200 digital projection systems.”

The long-term conundrum Cavey will face is that the digital trend he refers to will plateau in roughly four or five years, (maybe sooner), before it begins to decline. As more multiplexes convert to digital cinema, demand for the digital equipment making up the bulk of Strong’s earnings will undoubtedly drop off. The opening of a network operations center in early October is Strong’s way of increasing their cinema service product offerings. The move makes perfect sense for those theatre owners financing their own installations who may need 24/7 remote system monitoring and support. At the same time, it gives Strong a recurring source of revenue to fall back on as equipment sales level off.

Cavey may already be getting a taste for how difficult life can be working in digital cinema – on the day of Strong’s positive earnings announcement their stock price closed down 4.33 percent at 8.40.

Earlier today shares in the Eastman Kodak Company skyrocketed 12% after the company announced their third-quarter financial results had beaten Wall Street expectations. It wasn’t that Kodak had turned a huge profit, but rather it hadn’t lost as much money as had previously been forecast.

Per U.S. generally accepted accounting principles (GAAP), Kodak had third-quarter losses from continuing operations of USD $43 million or $0.16 a share on sales of USD $1.785 billion. That may not sound like good news, though compared to last year’s third quarter loss of USD $111 million or $0.41 it’s a huge improvement.

Kodak has inkjet printers to thank in large part to its improved performance. Turns out those little inkjet cartridges that always seem to be empty in your printer produce a hefty profit margin. Revenue from the company’s inkjet products grew by 23 percent, helping its digital commercial printing division expand by 13 percent. In fact, all of Kodak’s digital businesses were up a combined 10% during the quarter, the fourth consecutive quarter to show year-over-year increases.

It wasn’t all good news for Kodak however, and it is in an area of more specific interest to our readers that the company suffered steep decline. Sales for Film, Photofinishing and Entertainment Group amounted to USD $431 which is down 25 percent from last-year’s third-quarter. Per Kodak’s announcement:

This decrease in earnings was primarily driven by industry-related declines in volumes and increased raw material costs, partially offset by cost reductions across the segment.

In other words, the increase in digital cinema installations is causing studios to print fewer 35mm prints and lower the amount of film stock they purchase for such purposes. It doesn’t help that the cost of the silver and aluminum used in Kodak’s film-based products has increased. On the bright side, losses from these divisions weren’t as bad as they could have been since the company jettisoned most of their digital cinema efforts, thus lowering operating overhead.

While Kodak continues to find a path to profitability in the digital world with increasing success, it still forecasts a USD $50 million to $150 million loss for 2010.

Despite much of the world suffering from economic recession Cineworld seems to be having a banner year. Yesterday the United Kingdom’s second largest theatre chain reported that total revenues were up 8.5 percent since the beginning of the year. Cineworld’s success is spurred on by 8.3 percent year-over-year growth in box office since June.

Cineworld’s share of the U.K. box office has crept up to 24.5 percent to date, which is an increase over last year’s 23.8 percent. The company credits Hollywood blockbusters, specifically those in 3D, as being the cause for higher admissions and 1.5 percent in retail revenue. Specifically, Cineworld cited summer hits such as “Shrek Forever After” and “Toy Story 3″, both in 3D, as well as “Twilight: Eclipse” as being particularly profitable for them.

The third installment of the “Toy Story” franchise has earned GBP £70 million (EUR €80.1 million or USD $110.5 million) in the U.K. making it the territories top film of the year. For Cineworld, this not only means increased box office from higher ticket prices, but also revenue from selling 3D glasses. In fact, the company’s “other income” from the sale of glasses, booking fees and renting theatre space rose 43.8 percent when compared with last year’s figures.

With 3D helping drive box office it’s no wonder Cineworld is on schedule in a three year rollout of digital cinema in their 77 venues. In fact, they plan on converting even more screens in the next four months:

Our ongoing investment in digital continues with the next stage of our programme to install a further 150 digital projectors by the end of January 2011. Once completed over 50 percent of our 801 screens will be digital, with the vast majority being 3D enabled, further extending our capability to offer more 3D and alternative content to our customers.

Another good sign for Cineworld is that on-screen advertising seems to be rebounding. Though advertising brings in only 3 percent of Cineworld’s revenue, they are partners in Digital Cinema Media (DCM), a joint venture with Odeon Cinemas launched in 2008 to provide cinema advertising to both companies.

With titles such as “Tron Legacy” and “Harry Potter and the Deathly Hallows: Part 1″ yet to be released, Cineworld is adjusting its year-end revenue forecast upwards to GBP £341 million (EUR €390 million or USD $538 million). This should leave them with a tidy profit of GBP £35 million (EUR €40 million or USD $55 million). This is in line with what the market had predicted.

Shares of Cineworld on the London Stock Exchange are up 37 percent since the start of the year.

Cinedigm has published its Q4 and year-end financial figures for fiscal 2009, which make for interesting reading, given that the company is the only* publicly listed third-party digital cinema operator. The good news is that the company is treading water, not drowning. The bad news is that it does so in a sea of red ink. Let’s take a closer look at the number and highlight some of the key statements in the company’s press release.

You know that the company has little to write home about when it starts off its list of achievements with the re-branding of the company from AccessIT to Cinedigm, instead of talknig about the number of screens converted, as CEO Bud Mayo does:

“The past year has been tremendously exciting for Cinedigm. Not only did we rebrand the company, but we also brought ground-breaking events to consumers and fans of college football and the NBA in the fourth quarter.”

He then goes on to acknowledge that it is a cold financial wind blowing out there, but trusts the resilience of the exhibition industry and 3D to carry the business through. So how bad are the economic conditions and what has the impact been for the company’s bottom line? First of all, let’s do way with Cinedigm’s EBITDA and the likes. Any CFO with half a brain these days will tell you, revenue is vanity, profit is sanity and cash is king, so the fact that Cinedigm’s revenue is up three per cent is of little consequence in the larger scheme of things.

Encouragingly operating losses decreased from $5.9m to $4.9m for FY09 compared to FY08, according to Cinedigm, due to “increased revenues and reduced direct operating expenses and SG&A, offset by an impairment charge and increased depreciation.” Similarly losses decreased for Q4 from $2.4m to $2.0m. But look more closely at the P&L figures lower down, particularly for the last three months. you will see that net loss was improved by $1,889,000. However, this is more than explained by the difference in interest payments of $2,378,000, which is half a million more than the difference in profit and loss for the the last three month. So the depressed interest rates is what is helping Cinedigm, rather than any management miracles.

There are also some worrying admissions that point to financial challenges in the months ahead:

Fiscal 2009 fourth quarter revenue decreased by 18%, to $17.9 million from $21.9 million in the comparable year-ago period primarily due to a contracted 16% step-down in VPF rates and seasonally fewer titles and prints in the quarter. This contracted step-down in VPF rates charged to the major studios will stabilize with just one more contracted reduction of 7% in the third quarter of fiscal 2012.

So the good news is that there will only be one more cut in the VPF rate, the bad news is that there should be any cut in the VPF rate in the first place. Remember that AccessIT (as it was then still called) got the best VPF rates that any company will ever get from the Hollywood studios in Phase 1 of its deployment – which mainly helped kit out troubled exhibitor Carmike – with VPFs currently being much lower.

It is well known that there are penalty clauses in VPF payments for entities that don’t meet their target number of screens (hello, Arts Alliance and XDC!), but that there should be automatic VPF fee cuts for entitites that came very close to meeting their full target, s AccessIT did in Phase 1, is troubling. And where does Cinedigm stand with regards to deployment for Phase 2? Mayo again:

“We are optimistic about our intensifying efforts to secure financing for Phase 2 installations through third party lenders as well as our exhibitor and vendor partners which will generate ongoing fees and other key revenue streams for Cinedigm. To date we have installed 139 Phase 2 screens and approximately 3,900 screens in total.”

139 screens is a drop in the ocean, or just over one per cent, of the planned 10,000 screens for Phase 2. Don’t expect Cinedigm to be collecting much in the way of the anyways reduced  VPF for these screens. Cinedigm aknowledges as much when it goes on to state that “All comments regarding fiscal year 2010 do not assume a large Phase 2 deployment or a large rollout by other entities, including DCIP, although the Company expects both to occur.” Though to be brutally honest, the likelihood of the latter is greater than the former.

Instead Cinedigm is pinning its hopes to a growth in DMS (digital media services) division revenue, cushioned by steady income (minus another VPF rate cut) from Phase 1. The strategy is thus to keep treading water, hope for the financial climate to improve. At leasthe amended credit facility with GM should ensure that no sharks will be circling just yet.

The situation is unlikely to be much better for the likes of AAM and XDC, though because they are not publicly listed companies, there is no way of knowing whether they are swimming, sinking or treading water nearby, waiting for rescue in the form of radically improved financial climate and/or a buy-out.

*(Companies like Dolby and Kodak are also engaged in third party deployment, but it is not their primary business, unlike Cinedigm, which we group with Arts Alliance Media and XDC)

There is a standing joke in the industry that to make a small fortune in digital cinema you need to start with a large fortune. Sadly, this sentiment seems to be vindicated by the latest quarterly figures from Cinedigm (formerly AccessIT). The company’s scorecard is impressive enough:

And the revenue has been going up year-on-year and quarter-on-quarter, as the press release proudly trumpets:

Access Integrated Technologies, now doing business as Cinedigm Digital Cinema Corp. (“Cinedigm” or the “Company”) (NASDAQ: CIDM), reported a 10% increase in year-to-date revenue to $65.1 million, and a 6% increase in revenues, to $22.7 million for the fiscal 2009 third quarter ended December 31, 2008, versus the year-ago periods. The Company posted an Adjusted EBITDA (defined below) of $11.0 million or $0.40 per share, an improvement from the fiscal 2008 third quarter of $8.4 million.

But is there any profit? No, the company is still burning through money. $17.4m in losses in the most recent quarter to be precise. What are the implications of this? The 10-Q transcript makes for grim reading;

We have incurred net losses historically and through the current period, and until recently, have used cash in operating activities, and have an accumulated deficit of $128.7 million as of December 31, 2008. We also have significant contractual obligations related to our debt for the remainder of fiscal year 2009 and beyond. We expect to continue generating net losses for the foreseeable future. Certain of our costs could be reduced if our working capital requirements increased. Based on our cash position at December 31, 2008, and expected cash flows from operations, we believe that we have the ability to meet our obligations through December 31, 2009. We are seeking to raise additional capital to refinance certain outstanding debt, to meet equipment requirements related to the Access Digital Cinema Phase 2 Corp. (“Phase 2 DC”) second digital cinema deployment (the “Phase II Deployment”) and for working capital as necessary. [emphasis added]

So the company can keep going to the end of this year, but what is the outlook after that?

Although we recently entered into certain agreements related to the Phase II Deployment, there is no assurance that financing for the Phase II Deployment will be completed as contemplated or under terms acceptable to us or our existing shareholders. Failure to generate additional revenues, raise additional capital or manage discretionary spending could have a material adverse effect on our ability to continue as a going concern. The accompanying unaudited condensed consolidated financial statements do not reflect any adjustments which may result from our inability to continue as a going concern. [emphasis added]

Don’t think that things are any easier for the European brethren of Cinedigm, as both Arts Alliance Media and XDC are likely to be feeling the pain, though as neither are listed companies, that pain is not public.

To underscore the difficulties of this market, Technicolor is recently said to have pulled out of the digital cinema integration and deployment market to focus on core businesses, such as print and mastering services (although the company’s digital cinema website still lists ‘Exhibitor Services’ and talks about its TMS and other features).

While governments are busy bailing out high profile industries such as banks and automobile makers, they are unlikely to be sparing a thought (let alone a dime or Euro cent) for third party digital cinema integrators. They are also unlikely to contribute generously to conversions funds, as had previously been proposed in Germany, France, Poland and elsewhere (only Norway might see such plans through). This means that digital cinema is likely to be delayed by several more years and film is safe for some time yet.

The one company benefitting from this delay is ironically also trying to position itself as a third party integrator; Eastman Kodak. In an article headlined ‘Recession helping Kodak on motion pictures‘ we can read:

The recession is causing economic turmoil worldwide and costing millions of people their jobs. But it’s also helping extend the life of Eastman Kodak Co.’s entertainment film business.

Motion picture industry experts had expected that close to 12,000 motion picture screens worldwide would have been converted to digital by the end of 2008, according to Kodak. Instead, the recession slowed the pace of replacing film projectors with digital ones, and fewer than 8,000 screens have gone digital, said Mary Jane Hellyar, president of Kodak’s film, photofinishing and entertainment group.

“The move to digital adoption essentially stalled out,” Hellyar told a crowd of Wall Street analysts during Kodak’s annual investors conference in New York City last week. “The impact of digital on film … continues to be relatively small.”

This isn’t exactly true as Kodak has had to lower its prices on raw stock, but suffice to say it looks like we won’t be changing our name to Digital Junkie just yet.

As if the recent quarterly earnings reports from Warner Bros, Walt Disney and News Corp were not proof enough that the entertainment industry is far from recession proof, news is out that Dolby Laboratories will be closing down its UK manufacturing operation. Some 60 people will lose their jobs from the shuttering of their UK manufacturing base. From BBC news website:

The company, which provides products for the cinema industry, is closing the manufacturing arm of its UK operation in Wootton Bassett in April.

It blamed “changing market conditions” for its decision to close the site which employs 170 people.

Dolby says other business activities at the site will be not be affected.

This is a bitter blow for a company that started in the UK and whose British operation still sees itself as the carrier of founder Ray Dolby’s torch, even when the man himself moved back to the UK and most of the company’s activities is out of San Francisco these days. But it would not be true Brit grit if they did not put a brave face on the decision and declared in their recent earning’s statement: “Having concluded a comprehensive consultation process with our UK employees, the proposal to close our UK manufacturing operation at Wootton Bassett and consolidate manufacturing operations at a single facility has been accepted.”

One could blame digital cinema, where Dolby is actually doing very well thank you, for taking away the market for some of Dolby’s more traditional products. It recently announced new 3D installations and unlike the studios above, the company had good news at the recent quarterly results that resulted in the shares shooting up by a fifth. From Forbes:

Shares of Dolby Laboratories shot up nearly 20.0% Thursday as the entertainment products company got a boost in the wake of strong first-quarter earnings.  Dolby (nyse: DLB – news – people ) was upgraded from “sector perform” to “outperform” by Pacific Crest Securities, which believes that the company will benefit from changes in Microsoft Windows 7. Analyst Andy Hargreaves thinks Dolby’s licensing growth will add 30 cents a share to its 2010 earnings per share, thanks to wider use of Windows Media Center.

But that is of little comfort to those joining the ranks of the unemployed in Wiltshire. And it is clear that investor excitement is about licensing rather than cinema equipment, which is showing a clear pattern of decline if you look at the past few years. From the company’s quarterly earnings report:

Product sales consists of revenue from sales of equipment to cinema operators and broadcasters representing 14%, 11% and 10% of total revenue in fiscal 2007, 2008 and the first quarter of fiscal 2009, respectively.

Our cinema products represented approximately 75% of product sales in fiscal 2006, 71% of product sales in fiscal 2007 and 55% of product sales in fiscal 2008.

These figures are obviously trending in the wrong direction.  Dolby hopes to offset this with the rise of digital cinema (which, the company dryly notes “unlike traditional cinema, does not include our proprietary audio formats. “) In fact, product sales are the only area where Dolby is losing ground year-on-year.  Below is another interesting passage from the earnings statement that discusses how gross margin is going to be adversely affected because of cinema products and leads to the consolidation of manufacturing:

Product Sales -  The 10% decrease in product sales from the first quarter of fiscal 2008 to the first quarter of fiscal 2009 was primarily due to a decrease in sales of our traditional cinema products and, to a lesser degree, our broadcast products. These decreases were partially offset by increased sales of our 3D products and digital cinema accessories. We have not recognized most of the revenue related to sales of our digital cinema servers due to certain obligations, which we have yet to satisfy. We currently have approximately $31.2 million of deferred revenue related to digital cinema server and certain 3D product sales. [emphasis added]

What this means is that the company is not counting those digital cinema servers deployed to Kinepolis and elsewhere. Coming back to the UK:

During the second quarter of fiscal 2009, management committed to a plan to consolidate all manufacturing operations into our Brisbane facility and as a result we will have limited internal manufacturing capacity for low volume products and prototypes and will work with contract manufacturers for higher volume products as necessary. This hybrid model will enable us to lower manufacturing cost and increase our average utilization rates while also giving us the capacity to scale production when needed. We believe this hybrid model may favorably impact our product sales gross margins in future periods. However, actual results may differ from our expectations.

What we are effectively seeing (and credit to my colleague JSR for highlighting this in a wider context) is that digital cinema levels the playing field between technology vendors (by removing proprietary technology). Dolby is now experiencing the same thing that almost every equipment manufacturer is experiencing: shrinking margins, increased competition, decreased sales and a need to reexamine how they do business.  Don’t be surprised if other cinema equipment manufacturers announce similar types of cost cutting moves in the near future.

A mixed bag of financial news for Canadian exhibitor major Cineplex, which saw a rise in 2007 numbers on most fronts, but was dragged down by a weak fourth quarter. From the coverage in Variety:

Toronto-based Cineplex, which operates 131 multiplexes nationwide with 1,327 screens, said it lost CAN$2.77 million ($2.74 million) during the three months ending Dec. 31, compared with a profit of $4.6 million in 2006.

Fourth-quarter revenue at Canada’s largest cinema chain was down 6.3% to CAN$182.6 million ($180 million), against a year-earlier $195 million as overall Canadian box fell 15.7% during the last three months of 2007.

But at least there is a good start to 2008, in part thanks to the now-ended WGA strike:

Going forward, Cineplex Entertainment CEO Ellis Jacob told financial analysts during a morning conference call that the first five weeks of fiscal 2008 has seen boxoffice jump 15.8%.

In addition, the exhibitor has received “a bit of a bounce” in theatrical attendance owing to increased TV reruns during the WGA strike.

Unlike most other end-of-year financial summaries for non-US territories and exhibitors there is no word how domestic fare fared or what it contributed to the up or down on the numbers, which confirms the suspicion that Canada is Hollywood’s 51st state.

While the latest financial results from Regal showed a healthy profit, the underlying numbers paint a far less comforting picture. From The Hollywood Reporter:

The company earned $23.2 million in the fourth quarter, down 21% from a year ago. But on a per-share basis, the company earned 15 cents, which was 4 cents better than Wall Street expected.

Revenue dropped about 9% to $599.9 million, less than analysts predicted, but investors focused on the positive and the shares rose fractionally Thursday to $18.57.

Admissions revenue was down 6% to $404.1 million and concessions revenue was off 8% to $158.4 million.

It seems that the exhibitor is relying heavily on National CineMedia for its revenue and profit growth. From the press release:

“In 2007, Regal Entertainment Group benefited from the successful IPO of National CineMedia, returned value to shareholders in the form of dividends totaling $485 million and continued to generate significant free cash flow,” stated Mike Campbell, CEO of Regal Entertainment Group. “We were pleased to start the 2008 fiscal year with our announcement of the pending purchase of Consolidated Theatres and look forward to the successful closing of this accretive acquisition,” Campbell continued.

It will be interesting to hear the transcript of the conference call (usually released a couple of weeks after the Q4 figures) to see what if any update on digital cinema Regal gave.

Projector maker Ballantyne of Omaha‘s Q3 2007 figures are in and it is evident that digital cinema is starting to eat into the company’s revenue and profits. Net revenue is down 3.5 per cent compared to a year ago and gross profit was down from $2.2m to $2.1m – not a huge drop, but still a step in the wrong direction. In repsonse, Ballantyne is stocking up on digital projectors and are being candid about the underlying causes in their Q3 2007 filing:

John P. Wilmers, President and Chief Executive Officer of Ballantyne, commented, “As expected, our Q3 results reflect the ongoing impact of the exhibition industry’s transition from analog to digital projection technology. Our digital equipment business grew over last year but from a small base, helping to somewhat offset the decline we expected in our traditional film projector business. As we progress through the transition to digital, we are actively looking at ways we can streamline costs related to our legacy film products business and improve overall operating performance while still being able to properly serve our customers.

“Subsequent to the close of the third quarter we were successful in extending our participation in the rollout of REAL D 3-D technology, providing 24 digital projectors to Regal Entertainment Group. The project was in conjunction with the October release of The Nightmare Before Christmas, an animated feature in Disney Digital 3-D.

Wilmers then goes into details about the acquisition of Canadian cinema screen maker Marcel Desrochers Inc. (MDI), which might seem starange in the middle of digital discussions, but remember that with RealD still top dog for digital 3D, the need for silver screens is expected to go up in the future. Overall, the outlook is digital, digital and more digital:

“We continue to anticipate a broader scale rollout of digital cinema projection equipment in 2008 and have been building digital inventory, performing expected integration work and bolstering our service capabilities so that we are well positioned to satisfy customer orders. Our dialogues with customers reaffirm that service represents both an important growth opportunity as well as a key point of differentiation for our company.”

The filing does not go into detail whether the growth of digital cinema installations is saturating the market for second hand 35mm projectors or whether new multiplexes are exclusively installing 2K projectors, but both of these factors are likely. While the Christie/AIX 4,000 deployment is nearing its completion and DCIP’s big push is some months away yet, there is still time for Ballantyne to ride the digital wave into more profit.

The Marcus Corporation, the parent company of Marcus Theatres, reported its 2008 first quarter figures, which are looking good on the strength of a strong start to the box office summer. Total revenue was up over 20 per cent and operating profit was 11 per cent. The figures were even better for the cinema part of the company, with Marcus Theatres reporting a 24.6 per cent increase in revenues and a 25.5 per cent increase in operating income, with a fair chunk of the growth coming from the acquisition of Cinema Entertainment Corporation (CEC).

Being known for dinner theatre Marcus Theatres is forward looking in expanding the horizons of the cinema going experience:

The AT&T Palladium, our cabaret-style auditorium with tableside food and beverage service, has been well received for movies as well as comedy and magic shows, and most recently, for big-screen showings of Green Bay football games, which will extend throughout the season,” said Marcus.

“Broadcasting live events from football to opera is part of our strategy to expand our audience base by providing alternate programming when our theatres are not busy showing first-run movies. As part of this initiative, we recently signed an agreement with National CineMedia for the presentation of live and pre-recorded in-theatre events including sports, music and other events at 21 of our theatre locations,” he added.

“We also are continuing to do further research for digital cinema and will conduct additional tests at selected theatres over the next six months, including the newest version of the highly anticipated digital 3D technology,” Marcus added.

Let’s see how much that contributes to the bottom line once they get serious about digital.